Posts tagged ‘House Prices’
Mortgage lending jumped to a six-year high in July as the market remained resilient in the face of regulatory change, figures showed today.
A total of £19.1bn was advanced during the month, 7 per cent more than in June and the highest figure since August 2008, according to the Council of Mortgage Lenders.
The group said mortgage activity appeared to have remained robust, despite the tough new affordability criteria introduced under the Mortgage Market Review earlier this year.
But it cautioned that the eventual impact of the regulatory change remained uncertain.
July was the third consecutive month during which lending levels have increased, following a slight dip in March ahead of the introduction of the MMR.
Caroline Offord, CML market and data analyst, said: “Property transactions in the first half of the year showed a 25 per cent increase compared to the same period a year ago, but we expect that intensifying affordability pressures could start to dampen this upwards trend.”
The figures came as minutes from the Bank of England’s Monetary Policy Committee suggested a hike in interest rates could be closer than previously expected.
The minutes showed that two members of the committee vote to raise the Bank Rate from its current record low of 0.5 per cent to 0.75 per cent in August.
It was the first time that the MPC has been split on what the official cost of borrowing should be since July 2011.
External MPC members Martin Weale and Ian McCafferty argued that although wage growth remained weak, it was a lagging indicator of the amount of slack there was in the economy, and rates should begin rising before that slack had been used up.
News of the vote prompted speculation that interest rates could start rising before the end of the year.
But Samuel Tombs, senior UK economist at Capital Economics, pointed out that data released since the MPC’s meeting showing a fall in inflation to 1.6 per cent in July and slower growth in employment, eased the pressure on the Committee to raise rates quickly.
He said: “We still expect the first hike to come in February 2015.
“But, even if the Committee decides to get on the front foot and raise interest rates before the end of the year, low inflation should ensure that the pace at which they rise is extremely gradual by historical standards.”
A 0.25 per cent increase in interest rates would add just over £20 a month to repayments on a £150,000 variable rate mortgage, which moves up and down in line with changes to the Bank Rate.
Meanwhile, the Bank of England’s Agent’s Summary of Business Conditions, also released today, built on previous indications that the housing market is beginning to slow down.
The report said housing transactions had eased in recent months due to a shortage of homes on the market and the introduction of the MMR, which had lengthened the mortgage application process.
It added that there were also signs of an easing in house price inflation, concentrated in the South, with some prices lower than they had been a year earlier, while there were also fewer cases of sealed bids and offers being made over the asking price.
But recent survey data has pointed to a slowdown in growth as more homes have been put on the market and buyers have started to bulk at high asking prices.
Nationwide Building Society said property values inched ahead by just 0.1 per cent in July, while surveyors questioned by the Royal Institution of Chartered Surveyors predicted prices in London, which has been the driving force of the market recovery, would rise by just 1.9 per cent during the coming 12 months.
Property values hit a new record high in June as prices jumped by £100 a day during the month, Government figures showed today.
The typical cost of a British home rose to £265,000 during the month to stand 10.2 per cent higher than a year earlier, according to the Office for National Statistics.
People getting on to the property ladder faced the steepest house price inflation, with the cost of a typical first time buyer home rising by 12 per cent during the year to £204,000.
The increase, which was the biggest since April 2010, means someone taking out a 75 per cent loan-to-value mortgage would need to put down a £51,000 deposit and have household earnings of around £50,000.
But despite the strong year-on-year rise in house prices, there were further signs that the market is beginning to slow.
The average cost of a home rose by only 0.5 per cent during June itself, down from a jump of 0.8 per cent in May and a 2 per cent gain in April.
The annual rate of growth also slowed slightly to 10.2 per cent, down from 10.4 per cent in May.
London continued to drive the rest of the market, with the typical cost of a home in the capital soaring by 19.3 per cent in the 12 months to the end of June to stand at £499,000.
But no other region in Britain recorded double-digit growth, with the South East posting the next strongest gain at 9.7 per cent, followed by the East at 7.9 per cent.
Once London and the South East were stripped out, property values across Britain rose by only 6.3 per cent during the year.
London, the South East and the East remained the only regions in which house prices have passed their pre-correction peaks, with the typical home in the capital now 35.6 per cent above the previous high.
In Scotland prices are only 1.6 per cent below their 2008 peak, while in Wales they are 3.2 per cent lower.
But in Northern Ireland the average home still costs 47.4 per cent less than it did in August 2007.
Ray Boulger, senior technical manager at mortgage broker John Charcol, said: “The rate at which property prices are increasing has stabilised.
“One thing that surprised me was that the annual figure for London increased slightly after dropping in the previous month.
“But the ONS figures are based on completions, so they reflect transactions agreed in March or April and lag other indexes such as Nationwide.”
There is growing evidence that the housing market is beginning to slow down following a period of strong price growth.
The Royal Institution of Chartered Surveyors said demand from potential buyers fell for the first time since mid-2013 during July, while the number of homes being put up for sale rose for the second consecutive month, easing the mismatch between supply and demand.
Meanwhile, Nationwide Building Society said property values inched ahead by just 0.1 per cent in July.
There is also anecdotal evidence from estate agents that house prices are falling in some of the prime areas of central London, while surveyors questioned by RICS predicted prices in the capital would rise by just 1.9 per cent during the coming 12 months.
But while the headline figure for house price inflation is easing, growth is starting to accelerate outside of London and the South East as the recovery ripples out across the country.
Property developers should build more bungalows to help solve Britain’s housing crisis, a Government minister has said.
Increasing the supply of bungalows would enable older people to downsize to smaller homes, freeing up larger properties for families, Brandon Lewis claimed.
Britain’s shortage of homes has been one of the key factors driving up house prices during the past year, as the supply of suitable properties has failed to keep up with demand.
Lewis, who was appointed as Minister for Housing and Planning in last month’s reshuffle, said many couples wanted to trade down to smaller properties once their children had left home, but they were reluctant to move into apartments or retirement homes.
He said the “quintessentially British bungalow” was an important part of Britain’s housing mix and developers should build more of them.
But despite the need for bungalows, there has been a sharp drop in the number of these properties being built.
Only around 2 per cent of new homes are bungalows, with just 300 of the properties built in 2009 – the latest year for which figures are available.
Lewis said his own parents-in-law showed why the country needed more bungalows.
“My in-laws are in their 70s, pretty fit, mentally really with it; they live in a normal house which they both struggle with,” he told the Daily Mail.
“They are not ready to move into what they would see as a retirement home, but where they live there is not access to bungalows.
“We should be looking to love bungalows a little bit more. They are an important part of the mix.”
Bungalows not only enable older people to downsize to a more manageable home, but they can also help them to release substantial equity in the process.
But a four bedroom house in the same area is selling for £399,950.
The Government amended planning guidelines earlier this year requiring council planners in England to set aside a certain number of flats or bungalows for older people in a bid to meet the needs of Britain’s ageing population.
But developers are thought to be reluctant to build higher numbers of bungalows, as houses are generally more profitable.
Planning rules that require developers to build at least 30 homes on every hectare of land also make bungalows unappealing to developers.
Lewis’ call echoes the findings of a report by think tank the Policy Exchange that called for the planning system to be reformed to encourage developers to build more bungalows.
The group estimated that there were 25 million unused bedrooms in the homes of older people, which it partly attributed to the fact that many homeowners could not downsize to a bungalow.
Homes close to Premier League football stadiums have seen their prices soar by more than twice the national average during the past 10 years, figures showed today.
The typical price of a property in the same postal district as a Premier League football ground has surged by 129 per cent in the past decade, more than double the price growth of 55 per cent seen across England and Wales as a whole during the same period.
The strong price growth has left the average home close to a major football team costing £329,520 – a third higher than the national average of £249,601, according to mortgage lender Halifax.
The group said properties close to Premier League football grounds had increased by more than £185,000 since 2004 – the equivalent of a gain of £386 a week.
Manchester City leads the Premier League property table, with the price of homes close to Etihad Stadium soaring by 150 per cent during the past 10 years, although at a typical cost of just £98,178, values are still well below the national average.
Homes around Hull City’s KC Stadium have seen the second strongest gain of 123 per cent, pushing the average property’s value up to £72,535, with Chelsea coming in third place, with house prices around Stamford Bridge jumping by 121 per cent.
But not all Premier League stadiums have proved to be winners for house prices.
Newcastle United finished bottom of the house price league table, with property values close to its home ground dropping by 22 per cent during the period, making it the only Premier League team to see house price falls in its district.
Unsurprisingly, given its London location, Stamford Bridge is the most expensive Premier League ground to buy a home near, with typical prices of £959,522.
The cost of a property near Chelsea’s ground is more than 15 times more expensive than a house close to Liverpool and Everton football clubs, which average just £62,416, making them the Premier League’s cheapest properties.
Craig McKinlay, mortgage director at Halifax said: “With the Premier League hailed by many as the best in the world, for many clubs some of this success also seems to have rubbed off on the surrounding areas.
“There is no rule governing why some areas have seen greater price rises than others.
“Some areas – but not all – have benefitted from clubs moving to a new stadium and all the infrastructure improvements which are associated with this.”
Meanwhile, research by Nationwide Building Society found that based on the performance during the past year, Tottenham Hotspur would top the house price Premier League.
Property values around White Hart Lane have risen by 32 per cent in the 12 months to the end of June to average £513,435.
Chelsea and Queens Park Rangers would tie for second place with house price growth of 27 per cent, followed by Arsenal with a 23 per centgain.
But Newcastle United, Burnley and Hull City would all be relegated based on the performance of their surrounding property markets.
Newcastle saw house price growth of just 3 per cent during the year, while in Burnley prices edged ahead by 2 per cent and in Hull there was no change at all.
Buyers look set to have the upper hand in the property market during the second half of the year following a jump in the number of homes for sale.
Househunters should have more choice when looking for a home after the number of properties on the market rose by 7.3 per cent in July, as homeowners rushed to cash in on recent house price gains.
At the same time, the number of potential buyers registered with estate agents fell by nearly 3 per cent, compared to a year earlier, suggesting those looking for a new home will also face less competition, according to estate agent haart.
The situation is the reverse of the trend seen at the start of the year, when demand was increasing at a faster rate than homes were coming on to the market, putting upward pressure on prices and leading to gazumping in some parts of the country.
The change in market dynamics was most pronounced in London, which has seen the strongest house price gains during the past year.
The number of properties being put up for sale in the capital soared by 32.3 per cent year-on-year in July, but demand dived by 15.7 per cent, as many potential buyers found themselves priced out of the London market.
Paul Smith, chief executive of haart, said: “The second half of 2014 marks a shift in favour of buyers as healthy volumes of stock return to the market.
“Many homeowners are adopting a now or never attitude to take advantage of the continuing strength of the market, having seen their equity rocket over the last year, at a time when mortgage deals with decent loan-to-values are still available.
“Interest rates are set to remain at historic lows until the start of 2015 at least and this is helping confidence.”
But despite the easing in the mismatch between supply and demand, there is no suggestion that house prices will crash, with estate agents still having an average of nearly 10 potential buyers on their books for every property, although the figure is well down on the average of 14.4 buyers for every home in January.
Smith said: “The market is still competitive, but buyers now have more choice.
“As positive market sentiment continues this year, and people return from their summer sojourns, we fully expect a busy autumn with a higher volume of sales transactions.”
The group said the typical British home now cost £204,216, the highest level for two years.
But although prices are 8.1 per cent higher than they were a year ago, they edged ahead by just 0.1 per cent in July itself.
Today’s research is a further indication that the property market is beginning to slow naturally, without the need for further intervention.
It comes the day after estate agent Hamptons International predicted house price growth would slow next year as uncertainty caused by the General Election and the prospect of higher interest rates lead to an easing in buyer demand.
The group expects the typical cost of a home in England and Wales to increase by 8.5 per cent this year, before growth cools to 5.5 per cent in 2015.
It added that the London market would be hit hardest by the slowdown, with house price inflation in Greater London dropping from 15.5 per cent this year to just 3 per cent next year.
Recent figures from the Land Registry also indicated that the property market is slowing down, with prices falling in seven regions of England and Wales during June – the latest month for which figures are available.